Saturday, 30 July 2016

South Sudan’s Civil Strife in Perspective

Paul Collier, a professor of economics and public policy in the Blavatnik School of Government at the University of Oxford, documents in his book known as The Bottom Billion that civil war is likely to occur in a country that experiences the following conditions: low income among the citizens, slow economic growth or stagnation or a decline in economic growth and of course outright dependence on primary commodities.

South Sudan has the third largest oil reserves in Sub Saharan Africa. In South Sudan, oil is the largest primary commodity and as a matter of fact, 98% of the country’s revenue stream comes from the oil proceeds. This largely implies that South Sudan’s economy is primarily dependent on oil.

The occasional relapses of South Sudan into civil war, which is now turning out to be a permanent feature of the state, is a function of a series of factors which are endogenous. These factors, however, can be summed up into one; weak institutions. More specifically, such factors include elitism, corruption, unresolved questions about the natural resources (read oil), and negative ethnicity.

Juba began on a wrong footing after its separation from Khartoum following the successful conduction of a plebiscite. South Sudan had not incorporated a strong institutional framework in its system of governance especially in terms of transparency and accountability. Oil was already there even before the creation and formation of the South Sudanese state. Therefore, before its separation from the north, the elites including other power brokers had already begun positioning themselves to illicitly benefit from the oil revenue. The institutional framework of governance that was established after her independence thus seemed to favour the elites; the barons of graft and the barons of ethnicity.

The several factions and rebel groups in South Sudan are motivated by the fact that once you have power, acquisition of wealth through corruption and other voracious means is assured. The fight for the control of the economic resources is the epicenter of the civil strife. In this case, for South Sudan, the main channels for the economic resources is first through the oil revenues and secondly through the foreign aid by donors, the multi-lateral institutions and other governments.

If 98% of the total revenue stream into the country is through the proceeds from oil, then it implies that the remaining 2% is through the financial aid from the mentioned entities. On average, as per the 2015 statistical figures, South Sudan’s net oil income is approximately $1.715 billion. If this represents the 98% then the remaining 2%, which translates to $35 million, comes from other sources. However, these figures only represent the revenue and are exclusive of the Foreign Direct Investment (FDI) by various units like the European Union, the USA, and China among others.

The bottom line as to why Salva Kiir, Riek Machar and other rebel leaders subject the citizens of South Sudan to unending misery and suffering is the perception that the former leads a corrupt administration and that his cronies are responsible for siphoning the resources of the state. This has of course placed the Kiir-led administration on a defensive mode prompting the government to make huge allocations of the national budget towards military spending.

According to a report by the Stockholm International Peace Research Institute released in April 2015, South Sudan spent $1.08 billion on the military. Compare this against the total revenue of the country at that time at approximately $1.75 billion. This translates to 62% of the total revenue. According to the national budget of the Government of South Sudan, 40% of the expenditure caters for the operations and activities of the military. If in 2014 the military spending was $1.08 billion (40% of national budget) it implies that the total budget was $2.7 billion. This makes South Sudan the state with the highest proportion of its revenue directed towards military spending in the world.

If 40% of the budget and more than 60% of the revenue caters for the military expenditure it means that the capitation for development, specifically infrastructural development, is constricted. For instance, a study carried out by Oxfam International revealed that only 5% of the 2013/14 budget was used on healthcare, education and infrastructure combined. This is a hint that a larger proportion of the budget is skewed in favour of the recurrent expenditure; a huge chunk is devoted towards the payment of salaries and wages.

Again, factor in corruption and you’ll realize that the South Sudanese citizens hardly benefit from the government. And of course going by the Corruption Perception Index prepared and released by Transparency International in December 2014, South Sudan ranks at position 171 out of 175 countries. The survival of the rebels in this state is majorly through two ways: one is through proceeds from a black market in the regions which they control and two, through funding from the communities in the diaspora.

Going Forward
To ensure that South Sudan doesn’t fall into the abyss that encumbered Somalia, certain measures need to be taken. Firstly, the demilitarization of Juba has to be given the first priority. The high number of rifles and other war equipments/machineries has to be effectively reduced because going by the recent happenings assassination of the key leaders is imminent.

Concomitant to the above, the African Union and the United Nation’s Organization need to strongly advocate for the prosecution of Salva Kiir, Riek Machar and any other leader found to have committed crimes against humanity. The International Criminal Court should commence its investigations into the atrocities in South Sudan. This is certainly where I find most of the African leaders very dishonest in opposing the ICC. The South Sudanese nationals are suffering and urgent action needs to be taken by prosecuting these despots who have shown no goodwill in actualizing the vision and aspirations of the South Sudanese people.

Thirdly, a three-pronged economic policy approach ought to be implemented. One of the facets of this policy has to focus on addressing the macroeconomic issues including the budgetary structure, the fiscal deficits, inflation, corruption and others. The 2016/17 budget has a deficit of $1.1 billion (25 % of the GDP) which the International Monetary Fund notes that it has to be cut to around $300 million for fiscal sustainability. Another key macroeconomic issue that has to be largely looked at and viable solutions arrived at pertains the distribution of wealth. Institutions and systems have to be established that track the goods and services provided to the public from the resource wealth.

Most importantly, another aspect of the economic policy would be for China to call for better governance in the country by virtue of being the biggest shareholder in the oil industry with 120 oil enterprises. This is the problem with the Chinese developmental policy in Africa; exploration of natural resources without advocating for establishment of efficient governance systems.

The third tenet of the economic policy relates to the admission of expatriates to offer technical services. With a literacy rate of 27% for individuals aged above 15 years, it means that the economy of South Sudan needs a relatively large pool of expatriates. This, however, is a function of the realization of political stability in the state.

South Sudan’s development in reverse can be permanently solved by first addressing the fundamentals; the institutions of governance and consequently issues about resource as well as wealth distribution.

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